Global base oils - week of May 22: Price outlook - inter-grades

·        Europe Group II prices maintain narrower premium to Group I prices, incentivizing blenders to procure more premium-grade base oils.

·        Europe unapproved/semi-approved Group III price premium to Group I/II base oils holds close to narrowest in at least three months – boosting interest in the premium-grade supplies.

·        Europe approved Group III price premium to Group I base oils stays high, even if much narrower than three months ago.

·        Europe approved Group III premium to Group I holds at lower level even with Group III plant maintenance work in Europe and Asia in Q2 2023.

·        Narrower premium suggests supply is sufficient to meet demand.

·        Wider Europe domestic price premium to export prices suggests strong domestic demand and tighter surplus supply.

·        Wider premium is less sustainable if fundamentals deviate from that dynamic.

·        Wide gap between domestic and export prices can incentivize domestic buyers to hold off when supply is plentiful.

·        US Group II prices maintain unusually steep gap between light and heavy grades.

·        Dynamic contrasts with much narrower light-heavy price spreads in Europe/Asia.

·        Asia Group II light-grade premium to Group I stays wider than usual, partly reflecting unusually low Group I prices.

·        Asia Group II heavy-grade premium to Group I stays wider than in Q1 2023, holds at levels that are unlikely to incentivize blenders to target more Group I instead.

·        India’s Group III 8cst base oils imports rise to eight-month high in April as prices fall back to discount to Group II heavy grades for first time this year.